Corporate workforces are becoming more global, but talent management is not keeping pace.

Organizations must prepare managers for leadership positions by exposing them to different business and cultural environments.

It is hard to find a corporation that is NOT global.

Among our survey respondents, just 9% say that their workforce is based entirely in the country of their corporate headquarters. In three years’ time, this proportion will fall to 4%.

Yet those organizations with an overseas workforce of more than 60% score lowest on:

Adapting talent management to changes in the business environment

Understanding the relationship between talent and company performance

Investing in talent management

This gap will have fundamental implications for the way companies manage talent. Companies will need to create career paths that give high-potential managers and executives exposure to different markets to broaden their knowledge and make them more appreciative of different cultures.

The old hub-and-spoke model of a strong headquarters and a weak subsidiary that must look to the center for all decisions will no longer be suitable.

Our survey results show a link between decentralized decision-making and stronger financial performance. High performers are much more likely to have granted greater decision-making freedom to direct reports and to have redefined their roles in a more open-ended and flexible way.

It is essential for organizations to prepare their managers for future leadership positions by giving them exposure to different business and cultural environments. Yet companies struggle with this.

Even among high performers, only 53% create opportunities for employees to work in different countries. This could be because of logistical difficulties such as tax barriers or stringent immigration laws; cost pressures; or post-assignment attrition rates, a common challenge.

According to a survey by Brookfield GRS, an executive relocation consultancy, 38% of overseas assignees leave the company within a year of completing their assignment and 61% leave within two years 1. In an EY survey of more than 520 companies, 27% of international assignees returned to their old jobs and 11% resigned within two years of completing their assignments 2.

“Overseas assignments are very often value-destroying – not because companies don’t select the right people but because they don’t know how to bring them back,” says Boris Groysberg, Professor of Business Administration at Harvard Business School.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.